Maggie Mahar from Health Beat has written a fantastic, in-depth article about the cost of health care in the US. Most Americans have health insurance and are thus somewhat insulated from the actual cost of health care. What they’re not insulated from is the cost of health insurance, since we all get the annual letters detailing just how much our premiums will be rising in the coming year. It’s easy to get frustrated with the health insurance company when it’s rate increase time, but the driving factor for health insurance premium hikes is the ever-increasing cost of health care. Maggie has done a very thorough job of explaining why health care costs are so high in this country, and what can be done to bring them more in line with what other countries pay.
We love our technology, and health care is no exception. New drugs, treatments, tests, and medical devices are constantly being rolled out, but with little or no regulation on pricing. Sellers set the prices, and since our health hangs in the balance, we consumers pay the asking price with little room for market forces to act. Health care consumers tend to defer to their doctors when it comes to demand – if our doctors say we need a particular test, drug, or medical procedure, we take their word for it. So “demand” for health care can’t be equated to demand for say, televisions or down comforters. Just as there isn’t really a free market in the health insurance industry, neither is there a free market in the health care industry.
One thing that we consumers have demanded is easy access to convenient health care. And on the high-cost end of the health care spectrum, the market has responded by adding all sorts of specialty clinics, complete with expensive diagnostic equipment and overhead costs. Maggie refers to Dr. Donald Berwick, president and co-founder of the Institute for Healthcare Improvement, who believes that most metro areas in the US would be better served by having fewer high-tech and specialty clinics – thus saving money on equipment and overhead by sharing with other doctors and providers. It’s interesting to note that we have a shortage of emergency rooms and nurses, and an excess of high-priced specialty health care clinics (locations that provide cardiac surgery and high-level imaging, for example). I wonder if that has anything to do with the higher prices that can be charged for specialty care, and the greater likelihood that patients at such clinics will have health insurance?
While a for-profit health care industry has absolutely led to out-of-control prices, Maggie points out that “In the U.S., the government (i.e. taxpayers) picks up more than half of our national healthcare tab by paying for Medicare, Medicaid, care for government employees, the Veterans administration and other government health programs. As a purchaser, the government does have the size and the clout needed to insist on discounts. The problem is that Congress does not have the spine to stand up to the lobbyists and let Medicare begin negotiating for lower prices.” But I would contend that in the realm of Medicare, the government has negotiated much lower prices. Kidney dialysis is one area that I’m fairly well-educated about, as my father has been on dialysis for several years. He lives in Colorado, but over the years, he’s been treated at various hospitals and dialysis centers across the US. The monthly bill for his dialysis treatment (standard fare, regardless of where it is done) has ranged from $2,800 to $18,000. And yet Medicare pays $2,800/month for dialysis, regardless of what the facility bills (the rest is written off, and cannot be billed to the patient). This is just one example – Medicare has negotiated rates that are far lower than private health insurance reimbursement amounts on just about every treatment imaginable. The problem is that these rates haven’t carried over into the rest of the health insurance world.
When it comes to health care, those of us with health insurance have become accustomed to getting everything we need and more, and getting it right now. And preferably without having to go very far to get it. But all of our health care excesses have a cost, and for insured Americans that cost is showing up in the form of ever-higher health insurance premiums. For those without health insurance, the cost is putting health care further outside the realm of possibility. As our country enters a recession, and as the government starts shelling out hundreds of billions of dollars to shore up our tattered financial industry, we are going to have to trim the fat in our health care industry. Maggie’s article has a lot of good ideas to get us started.
